What Home Buyers & Sellers Need to Know in 2022
Last year, the COVID-19 pandemic continued to upend the home buying process, causing a historic, nationwide inventory shortage. And, while economists expect home prices to increase at a slower pace than they did in 2021, the ultra-low mortgage rates that homebuyers enjoyed last year are forecasted to rise.
Meanwhile, buyers are still making offers above the list price in order to make their offer competitive — and sellers are still receiving multiple offers just like them. At the same time, sellers are also pressuring buyers to close quickly and forego the home inspection before they’ll even accept an offer. What’s more, many sellers are also demanding that buyers waive typical contingencies, such as the appraisal or mortgage contingency — which could put the buyer in a precarious position. As such, it’s crucial to consult with an experienced real estate attorney before making an offer if you want to have a chance at the property.
As buyer attorneys, we assist in negotiating contracts at accelerated speeds due to the high number of offers that sellers are receiving. Clearly, it’s crucial for buyers to be able to move quickly once an offer is accepted — which means that the down payment must be immediately available, and a contract of sale must be ready to be sent to the seller’s attorney.
Most properties in today’s housing market are selling for more than the listing price. However, one challenge of this for sellers is that the property doesn’t always end up appraising for the contract price.
In this scenario, if the buyer didn’t waive the appraisal contingency and the property didn’t appraise for the contract price, the buyer would have the right to cancel the contract and receive a full refund of the down payment — but they’d also be out of the running for the home. Fortunately, with the help of an experienced attorney, you may be able to renegotiate the price with the seller.
Rising Interest Rates: It's Happening in 2022
As inflation reaches record levels, the Federal Reserve will be accelerating the process of winding down programs that were meant to stimulate the economy earlier in the pandemic. Specifically, The Federal Reserve is expected to increase the federal fund rate, as well as initiate a massive reduction of the portfolio of bonds on the Federal Reserve Balance sheet — both of which are expected to increase mortgage rates, thereby affecting both refinances and home sales throughout 2022.
Eviction/Foreclosure Updates: Moratorium Expiring
New York’s Eviction and Foreclosure Moratorium expired on January 15, 2022, although many tenant advocates are calling for a fifth extension of the program. Fortunately, there are other programs now in place to assist homeowners and tenants who are still struggling due to the pandemic, such as the Emergency Rental Assistance Program (ERAP) for tenants and Landlord Rental Assistance Program (LRAP) for landlords, as well as a homeowner’s assistance fund.
With the eviction moratorium coming to an end, many tenant advocates are pushing for the passage of a statewide good-cause eviction bill. This would protect the tenant from any steep rent increases (which the bill defines as a 3% increase or 150% of the Consumer Price Index, whichever is greater) and allow paying tenants the right to renew their lease. However, a landlord would still be allowed to evict a tenant due to criminal activity or non-payment of rent, as well as if the landlord were seeking to reclaim the property for their personal use.
The Silver Lining
Despite interest rates rising in 2022, rates are still at historic lows, and the expected rate hikes are not anticipated to cause a significant slowdown in the real estate market. In fact, some industry giants are predict that home values will rise by as much as 11% this year.
Furthermore, substantial market research confirms that home inventory is beginning to increase. Therefore, the advice to homebuyers is to be prepared: It’s still very much a sellers’ market, but that doesn’t mean your dream home is not out there. So, do your research in advance, and find a good realtor and experienced real estate attorney so that, when the opportunity presents itself, you’re ready to compete.